A final peace agreement between the Philippines and Muslim separatists is at hand, with both parties closely observing a ceasefire agreement, Malaysian monitors said today.

The nine-member Malaysian monitoring team arrived in the southern city of Cotabato, seat of a Muslim autonomous region that remains mired in poverty.

Ranking members of the Moro Islamic Liberation Front (MILF), which has been waging a separatist rebellion since 1978, also live in heavily secured homes tucked in nearby hinterlands.

"Peace is near. All it takes is willpower from both sides of the conflict," Brigadier General Mohd Bin Sulong told AFP here.

Sulong is the head of the Malaysian delegation, which is laying the ground work for a larger mission set to arrive in October.

The observers are to monitor the implementation of a ceasefire signed in 2002 and could intervene to prevent conflicts from escalating.

"The ceasefire mechanism is running very smoothly," said Lieutenant Colonel Abdul Rahman Alavi, who will be heading the secretariat here in Cotabato.

Third-party mediator

Peace talks are likely to resume in October in Malaysia, a member of the Organisation of Islamic Conference (OIC) which is acting as a third-party mediator.

Allegations that the MILF has been harbouring militants from the Jemaah Islamiah terrorist network has cast a shadow over the negotiations.

The MILF has invited the Malaysians as well as the Australian government to visit their camps to check on the reports. Canberra has rejected the invitation but the Philippine government is to send a team to MILF camps after the Islamic holy month of Ramadan in November.

A senior military official who is familiar with the negotiations said that while the invitation by the MILF was welcome, "it would not do anything to dispel the accusations."

The JI is blamed for a string of terrorist bombings in the region, including the 2002 Bali bombings and an attack outside the Australian embassy that left nine dead in Jakarta earlier this month.